This section provides an overview of the source and application of funds in the delivery of education and training in Australia. As most of these funds can ultimately be traced back to initial government outlays, most of the tables relate to Government Finance Statistics (GFS). GFS data are compiled in accordance with the International Monetary Fund's Government Finance Statistics Manual 2001. GFS education data relate to the activities of the Commonwealth and the state and territory governments and, for the purposes of the data presented here, represent the general government sector only.

While the GFS provide an important perspective on education funding, a wider presentation using national accounting data is also important. National accounting data are compiled in accordance with the United Nations' System of National Accounts (SNA). Within the national accounting framework, the household sector includes both individuals and private non-profit institutions serving households (e.g. non-government schools).

Data for individual time periods are expressed 'in current prices', i.e. in terms of prices at a given time. Consequently, changes over time may be affected by price changes.

Education expenses

Final expenditure on education

Table 12.37 provides key data for 'final' education expenditure, sourced from the Australian System of National Accounts. Overall, national education expenditure in dollar terms increased over the period 2003-04 to 2007-08 by 33%, from $49.8 billion (b) to $66.1b. As a proportion of Australia's GDP, however, expenditure on education actually decreased from 5.9% to 5.8% of GDP over the period, after peaking at 6.0% in the 2004-05 and 2005-06 financial years.

While government final consumption expenditure increased by 27% ($8,091 million (m)) from 2003-04 to 2007-08, household final consumption expenditure on education services increased by 36% ($5,702m) over the same period. Estimates of household final consumption expenditure on education cover the actual expenditures of households plus any expenses of private non-profit education institutions that have been funded by government.

Private expenditure on education consists of household final consumption expenditure for the purpose of education services plus gross fixed capital formation by private sector units classified to the education industry (e.g. the value of work done on new building works of non-government educational institutions). Private expenditure on education in the 2007-08 financial year was $24,552m. Over the period 2003-04 to 2007-08, private gross fixed capital formation increased by 52% to reach $3,172m, while for general government capital formation, the increase was 53% to reach $3,990m.

Australia has been increasing its participation in a global market for education services. In 2008-09, exports of education-related travel services totalled $16,610m. Of this amount, fees paid by international students to Australian educational institutions totalled an estimated $6,259m, and $10,211m was spent in Australia by these students on associated living expenses (including food, accommodation and domestic transportation). Further to this, exports of royalties on education services (including royalty payments on manuscripts, education courses etc) were $67m, and education services (including education consultancy, correspondence courses, services provided through educational institutions etc) were $697m for 2008-09.

In 2008-09, Australia's imports of education-related travel services accounted for $829m, royalties on education services were $12m and education services were $46m. This means that Australia is a net exporter of education services, with a surplus of $16,487 for 2008-09.

Operating expenses for all levels of government are shown by economic type in graph 12.38 and by purpose in table 12.39. In 2007-08, employee expenses of $30,111m comprised 54% of all operating expenses on education.

Table 12.39 shows that total operating expenses (less intra-sector transfers) across all levels of government in 2007-08 were $55,473m, an increase of $3,619m (7%) from the previous year. This largely reflects increases in expenses on primary and secondary education of $1,561m (5%) and tertiary education of $1,738m (9%).

In 2007-08, over half (55%) of the operating expenses on education across all levels of government was spent on primary and secondary education ($30,544m). Operating expenses on the tertiary sector totalled $20,489m, which includes $15,235m on university education and $5,254m on other tertiary education (including TAFE).

Over the four-year period from 2003-04 to 2007-08, operating expenses for education increased by 28% across all levels of government. Operating expenses for primary and secondary education, and tertiary education both rose by 28% over this four year period.

Graph 12.40 summarises operating expenses for education for each level of government. In 2007-08, operating expenses for education were $18,694m for the Commonwealth Government, $39,613m for state and local governments and $15,568m for the multi-jurisdictional sector (mainly public universities). Intra-sector transfers that occurred between different levels of government for the purposes of education were $18,403m, resulting in total government operating expenses of $55,473m.

Operating expenses for education for state and local governments have remained higher than for the Commonwealth Government over the period from 1999-2000 to 2007-08. Over this period, operating expenses for education have increased proportionally more for the Commonwealth Government (80%) than for state and local governments (69%).

12.40 Government operating expenses on education, ^By level of government

Funds to support educational facilities and the delivery of education services, originate from a variety of sources, predominately grants from the Australian (Commonwealth) Government, and state and territory governments. Sales of goods and services include fees and charges for tuition, which vary considerably within the education sector. To a lesser extent, other sources of funds may include items such as donations or return from investments.

While primary and secondary education is free in government schools in all states and territories, fees may be charged for the hire of text books and other school equipment (particularly in secondary schools). Voluntary contributions may also be sought from parents. Most non-government schools charge fees, although these may vary from school to school. Tuition fees are set in consideration of the school philosophy and affiliation, level of government funding received, and the educational services and facilities provided. Additional fees may be charged for textbooks, subject materials and extra-curricular activities.

Most VET providers charge students fees for the administration of VET courses, for tuition, materials or for student amenities. These fees vary according to the type of course and its duration. Higher education institutions receive revenue from students who are required to contribute to the cost of their education through the Higher Education Loan Programme, and from other fee-paying students including overseas students.

Fees are usually charged for ACE programs that complement the formal programs and qualification pathways provided by the schools, VET and higher education sectors. Fees vary considerably between ACE programs, being determined by the diverse range of ACE providers including community-based organisations and educational institutions.